Despite landslide vote in Senate, Assembly Republicans raise questions about pharma transparency bill

Megan Messerly
Megan Messerly
Health CareLegislature

A second committee hearing over proposed transparency mandates for manufacturers of diabetes drugs broke down largely on party lines Wednesday afternoon, with Republican Assembly members expressing a healthy dose of skepticism about a bill that passed the Senate last week with significant bipartisan support.

SB265, sponsored by Democratic Sen. Yvanna Cancela, aims to lower the cost of certain essential diabetes drugs, such as insulin, by mandating that the companies that manufacture them report certain information to the state. But the pharmaceutical industry argues that the bill unfairly blames them for the rising costs of prescription drugs without taking a look at the scope of entities involved in setting drug prices, could pose antitrust, trade secret and confidentiality concerns and could even have legal concerns — though legislative attorneys have said they believe the bill to be “legally defensible.”

Republican Assembly members pushed Cancela during the hearing on whether her bill, which passed out of the Senate 19-2 last week, would actually help lower the costs of diabetes drugs for patients, raising concerns about portions of the bill that would require diabetes drug companies to report certain costs and profits associated with manufacturing the medicine and notify the state ahead of any planned price increases. They also took issue with a section of the bill that would require pharmaceutical sales representatives to report details of their interactions with doctors, including who they visited and what samples of gifts they gave.

“I appreciate where your heart is,” said Republican Assemblywoman Robin Titus, a family practice physician. “Unfortunately, I do not see the bill solving a problem.”

They also echoed a concern expressed by their Republican colleagues in the Senate over the past couple of weeks that the legislation focuses on pharmaceutical manufacturers instead of placing transparency mandates directly on insurance companies or the middlemen in the drug pricing process known as pharmacy benefit managers (PBMs) — third-party administrators responsible for administering prescription drug programs for health plans.

“When we talk about transparency, do you foresee an issue with transparency only being limited to one component of the supply chain from the start to the finish?” Republican Assemblyman James Oscarson, marketing director at a hospital in Pahrump.

Cancela noted that insurers and hospitals already have significant regulations placed upon them in statute, while pharmaceutical manufacturers have “not enough or really any transparency” mandated by law. She also said that she wanted to focus on manufacturers since they are at the beginning of the drug pricing process.

Last week, several Republican senators agreed to vote for Cancela’s bill on the Senate floor in the hope that a separate bill sponsored by Republican Senate leader Michael Roberson focusing primarily on PBM transparency would receive a hearing and possibly move forward too. Cancela’s bill passed on Friday, with Republican Sens. Don Gustavson and Joe Hardy in opposition.

A couple of Republican Assembly members also voiced concerns during the hearing about whether the bill could possibly violate other state or federal laws, despite an opinion from legislative counsel released online before the hearing stating that all provisions of the bill were “legally defensible.”

“We as lawmakers don’t make a law that requires people to break other laws,” said Republican Assemblyman Chris Edwards.

Legislative attorneys met with Cancela and pharmaceutical industry representatives over concerns that the bill would require manufacturers to report certain data, exempt that data from the state’s trade secret law and mandate notification ahead of certain planned price increases, according to the opinion. But the attorneys ultimately determined that the concerns were ultimately policy driven and not legal.

“We found that most of the problems that the industry mentioned in the meeting were policy concerns related to the difficulty of complying with the requirements of the bill and the potential effects of enacting the bill,” said Eric Robbins, principal deputy legislative counsel, in the opinion. “These concerns would not result in the bill being struck down in court. To the extent that the concerns expressed by the industry representatives were legal in nature, this office had previously researched those concerns and has determined that all provisions of Senate Bill 265 are legally defensible.”

According to the opinion, pharmaceutical industry representatives objected to a portion of the bill requiring manufacturers of certain essential diabetes drugs to report the costs of producing and marketing those drugs, the profit they receive from those drugs and any rebates manufacturers provide, among other data points. They also took issue with the requirement that companies notify the state 90 days before increasing the list price for essential diabetes drugs and the portion of the bill exempting certain data from the state’s trade secret law.

A representative for PhRMA, the trade association representing pharmaceutical manufacturers in the U.S., echoed those concerns at the Wednesday hearing, saying that the bill was “impossible to comply with as written.” But Democratic Assemblyman Will McCurdy pushed them on how companies could not track their marketing.

“How does PhRMA not track their marketing?” McCurdy asked. “We listened to the presentation during the intro and it talked about how much it’s marketed.”

PhRMA representative Brenda Gleason said manufacturers don’t track marketing information “to this level of detail” requested in the bill.

In her closing remarks, Cancela noted that much of the discussion about exactly what information companies will be required to provide the state will happen during the regulatory process and pushed back against the notion that the companies couldn’t come up with the data.

“The reality is they do have the data,” Cancela said.

PhRMA proposed an amendment to the bill to Cancela on Tuesday, more than three months after she introduced the bill, that would only require pharmaceutical manufacturers to report the list price of the drug and a justification for certain increases in the list price — stripping all the provisions from the bill text requiring them to report costs of producing the drug, profits and any rebates provided. The proposed amendment would also exempt all information provided to the state from disclosure under the state’s Public Records Act and would require the information to be kept confidential.

The amendment also keeps in language requiring pharmaceutical sales representatives to report the details of their interactions with physicians but limits those disclosures to representatives who provided more than $10 of compensation to a doctor or $100 aggregate over the course of a year. It also limits a requirement that health care nonprofits disclose contributions from pharmaceutical manufacturers to only diabetes-related nonprofits.

Asked Wednesday morning, Republican Gov. Brian Sandoval was noncommittal about whether he was comfortable with Cancela’s bill in its current form. However, he did note the amount of time his office has dedicated to the bill.

“We've been working, spending a lot of time on that. As you know, it's a work in progress,” Sandoval said. “(My chief of staff) Mike Willden has really worked hard with her on that bill. So obviously that's something we're following very closely and we have been working with the sponsor of the bill.”


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